20453 - VENTURE CAPITAL AND VALUATION
Course taught in English
Go to class group/s: 22
Innovative technology companies are a driving force behind the growth of advanced economies. They represent the most dynamic part of entrepreneurial firms, and contribute substantively to the creation of jobs, living standards, and wealth. They are important also for the continued growth of large established companies, which often obtain new products and technologies by acquiring innovative start-ups. A fundamental challenge for all entrepreneurs is the ability to reach out to owners of resources they do not own and convince them to commit them to their venture. Investors are the most important of such owners of resources since money is itself very important for attracting resources like skilled labor or specialized assets. The course mission is then to analyse and understand the process through which innovative entrepreneurs may obtain financing, the structure of financial contracts, and the implications for innovation strategy. Such analysis also needs to consider that an important characteristics of venture investors is that they become actively involved in the company, which they push to achieve success within a clearly defined time period.
The course analyzes the economics of venture investors and the venture fundraising cycle. The course is structured around the following themes:
1. An introduction to Entrepreneurial Finance.
2. The economics and strategy of venture investors.
3. Investor assessment of business opportunities.
4. Valuation of entrepreneurial companies.
5. Debt financing and staged financing.
6. Deal structuring, contracting, and deal management.
- Recognize the goals and constraints of different venture investors, and the implication these have on the management of an entrepreneurial venture.
- Understand the valuation of private knowledge-based ventures.
- Identify the different phases of a financing deal– origination, valuation, structuring,contracting, management, and exit.
- Formulate a business plan for eliciting interest from venture investors, and assemble financial projections to illustrate the venture’s business model.
- Elaborate a financial plan and fundraising strategy.
- Pitch a business opportunity to a potential investor.
- Calculate the valuation of an entrepreneurial venture, and assess the value relevance of the covenants in the term sheets.
- Negotiate a funding round.
- Face-to-face lectures
- Online lectures
- Guest speaker's talks (in class or in distance)
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
- Group assignments
- Interactive class activities (role playing, business game, simulation, online forum, instant polls)
The learning experience of this course is mainly based on online lectures, both recorded and interactive.
- The lectures consist of both academic materials and of illustrations taken from actual business situations that are commented and discussed. Academic materials are mostly explained and discussed in interactive online sessions, which also address actual business examples.
- In most modules the academic material is complemented by interactive case study discussions and by group execution and discussion of numerical and situational exercises.
- Instant polls are used to provide discussion material and to verify how the class is learning new concepts.
- There are two written case study assignments to be developed in groups, and at least one presentation by an external guest speaker.
- The use of actual business situations, case studies, and external speaker aims at better connecting the body of knowledge covered in the course with real business examples, focused on a variety of innovative venture experiences. The interaction between the instructor and students during the case discussions and the presentations helps students understand how entrepreneurs and venture investors approach, structure, and manage entrepreneurial funding.
- There course also includes a group assignment where students identify and analyze, in a structured way, one issue arising from an actual case of entrepreneurial funding. This allows students to discuss in depth a situation of their choice and present it to the class, to the instructors, and to entrepreneurs or investors (if feasible).
|Continuous assessment||Partial exams||General exam|
- Two group case study assignments. These assignments are due by email before the start of the class in which they are due. Late deliveries are not accepted. These assignments are designed with the purpose of verifying students’ ability to identify and analyze a real entrepreneurial finance situation using the tools learnt in the course.
- One group assignment examining one issue arising from an actual case of entrepreneurial funding. chosen by the group and approved by the course professors. The analysis is presented in a lecture to the class and (if possible) one entrepreneur and one investor, and is delivered after having received feedback from the course professors.
- A written exam (either two partials or one general) on all the topics covered in the course. The two partial exams have equal weight, and the exact split of course contents are announced in the syllabus. The exams include both open questions and exercises.
The two assignments are designed with the purpose of verifying students’ ability to:
- Identify and analyze the main issues related to the course.
- Work on a team and organize and present effectively the relevant outcomes.
Non-attending students’ assessment is fully based on a written exam (either two partials or one general) on all the topics covered in the course. The two partial exams have equal weight, and the exact split of course contents are announced in the syllabus. The exams include both open questions and exercises. For non-attending students the exams also include questions on the text and class discussion of all case studies.
- Slides and other materials made available on Blackboard
- Textbook: Marco Da Rin and Thomas Hellmann (2020) Fundamentals of Entrepreneurial Finance, Oxford University Press (ISBN: 9780199744756).
- Case studies from Harvard Business Press Online or developed by the course Professor.